Malta-based global commodity trading house Alkagesta has issued an updated market insight focusing on a dual supply crisis impacting international energy markets. The analysis addresses the ongoing diplomatic standstill over the reopening of the Strait of Hormuz and historically low water levels in the Rhine river, which it describes as creating a "state of emergency" for European inland fuel logistics.
In an article published on August 11, Alkagesta’s market intelligence and trading divisions detailed the convergence of these two logistical disruptions, which are tightening prompt fuel availability across key hubs including Singapore, Northwest Europe, and the Mediterranean. The Strait of Hormuz saw transits drop to a near one-month low of 13 vessels on August 9, following an incident involving an ADNOC-linked tanker. This occurred as the US and Iran reportedly demanded war reparations, delaying any potential reopening agreement.
Simultaneously, the Rhine river at the critical Kaub chokepoint reached 16 cm on August 10, marking its lowest level since records began in 1880. Forecasts projected a further decline to just 4 cm by August 14, which would effectively halt barge traffic and leave fuel oil stocks stranded in the ARA (Amsterdam-Rotterdam-Antwerp) hub. This situation significantly limits European fuel distribution capabilities.
The market situation has deteriorated in both primary regions. In Singapore, Middle Eastern fuel oil imports nearly tripled to 328,878 metric tonnes by July 29, the highest volume since March, helping commercial heavy distillate stocks rise to a five-week high of 19.58 million barrels by August 5. However, July bunker fuel sales are estimated to have decreased by 3.7% month-over-month to 4.44 million metric tonnes, with higher premiums diverting prompt demand to alternative ports such as Zhoushan and Port Klang.
In Europe, the Very Low Sulphur Fuel Oil (VLSFO) market faces acute undersupply as refiners prioritise higher-margin diesel production over low-sulphur blending components. The Rhine crisis has compelled barges to operate at 15–20% of their normal capacity, leading to a more than 400% increase in freight rates from Rotterdam to Karlsruhe over two months.
Alkagesta’s strategic assessment suggests a potential complete disruption of Rhine-dependent inland distribution by mid-August. They anticipate the VLSFO Hi-5 spread will remain above $200/mt through Q3, while analysts warn that the global crude market requires an additional 2.1 million barrels per day for 18 months to replenish depleted inventories. The full article can be accessed on Alkagesta's website.
Sources
- Manifold Times, “Alkagesta highlights key insights on European choke point pressures in August”, 2026-08-17 — manifoldtimes.com
- Alkagesta — alkagesta.com
